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DROUGHT IN THE WEST

Western drought improves fortunes of Florida cattlemen

Cary Lightsey of the Lightsey Cattle Co., above, a sixth-generation Lake Wales cattle rancher, says Florida is one of the few states where cattle herds and profits have improved.

THE LEDGER ARCHIVE / RICK RUNION

By KEVIN BOUFFARD, Lakeland Ledger

Published: Thursday, February 14, 2013 at 1:00 a.m.

Last Modified: Wednesday, February 13, 2013 at 8:30 p.m.

While other segments of the U.S. cattle industry are struggling, the 2013 outlook for the cow-calf operations, the dominant segment in Florida, continues to run with the bulls.

"Calf prices were at record levels last year," said Kevin Good, senior analyst at CattleFax. "We expect that to continue."

CattleFax, based in Centennial, Colo., collects, analyzes and disseminates information on U.S. and global beef markets for its members representing all segments of the cattle industry from calf producers to meat-packing companies and retailers.

Two Polk County ranchers agreed with that positive outlook for the Florida industry.

"We've made the most we've ever made in the last few years," said Cary Lightsey, a sixth-generation cattle rancher based in Lake Wales with about 9,000 head across the state. "Fortunately Florida is one of the very few states where cattle herds are higher now than they were five years ago."

"We've had a few good years, and the indications are 2013 will be another good year," said Will Putnam, vice president of Putnam Groves Inc., which also has a cattle herd of more than 1,000 head.

Like most Florida ranchers, Lightsey and Putnam operate cow-calf operations that supply calves generally sold by 1-year-old to ranches in other states, where they continue to grow until ready for slaughter.

The ranchers said that the Florida industry has prospered while their counterparts west of the Mississippi River are struggling after several years of drought.

"Drought relief is undoubtedly the best remedy to the current situation facing the industry," according to the February CattleFax report. "Record high input prices and contraction concerns can only ease if precipitation reaches much of the United States."

Feed crop devastated

Last year's drought destroyed about a third of the U.S. corn crop, the main ingredient in cattle feed, Lightsey said.

As a result, the percentage of the 2012-13 U.S. corn crop for animal feed, after subtracting for human consumption and ethanol production, shrank to 5.8 percent, the lowest in 40 years, said Chad Spearman, a CattleFax analyst.

That led to historic high prices, which are expected to hold for the first half of this year.

Meanwhile the drought dried up grazing land and sent hay stocks as of Dec. 1 to the lowest level in 55 years, Spearman said. That also led to record high prices, but CattleFax projected hay stocks would recover if rain returns to the Midwest and Southwestern states as anticipated.

The past several years of drought and high feed prices have forced cattle ranchers in other states to downsize their herds by selling more animals for slaughter.

The U.S. cattle population has declined by more than 7 million head during the past six years to less than 90 million head for the first time since the early 1950s, Spearman said.

With fewer cattle to support existing capacity at feedlots and packing plants, those segments have been losing money despite record high retail beef prices, Randy Blach, CattleFax CEO, told the conventioneers.

"Record high prices are no guarantee of profits," Blach said. "We have record high prices, but we also have record high break even points."

Despite losses farther up the chain, Florida cow-calf ranches benefit because the grazing operators, feedlots and packing companies farther up the chain need a certain number of cattle to stay in business, Blach and Lightsey said.

When cattle are not available from herds in other states, the demand for Florida calves increases.

The good times for Florida ranchers will continue until weather and market conditions allow their counterparts to rebuild their herds, Lightsey and Putnam agreed.

Even if that began today, it would take several years to rebuild to pre-drought herd sizes.

<p>While other segments of the U.S. cattle industry are struggling, the 2013 outlook for the cow-calf operations, the dominant segment in Florida, continues to run with the bulls.</p><p>"Calf prices were at record levels last year," said Kevin Good, senior analyst at CattleFax. "We expect that to continue."</p><p>CattleFax, based in Centennial, Colo., collects, analyzes and disseminates information on U.S. and global beef markets for its members representing all segments of the cattle industry from calf producers to meat-packing companies and retailers.</p><p>Two Polk County ranchers agreed with that positive outlook for the Florida industry.</p><p>"We've made the most we've ever made in the last few years," said Cary Lightsey, a sixth-generation cattle rancher based in Lake Wales with about 9,000 head across the state. "Fortunately Florida is one of the very few states where cattle herds are higher now than they were five years ago."</p><p>"We've had a few good years, and the indications are 2013 will be another good year," said Will Putnam, vice president of Putnam Groves Inc., which also has a cattle herd of more than 1,000 head.</p><p>Like most Florida ranchers, Lightsey and Putnam operate cow-calf operations that supply calves generally sold by 1-year-old to ranches in other states, where they continue to grow until ready for slaughter.</p><p>The ranchers said that the Florida industry has prospered while their counterparts west of the Mississippi River are struggling after several years of drought.</p><p>"Drought relief is undoubtedly the best remedy to the current situation facing the industry," according to the February CattleFax report. "Record high input prices and contraction concerns can only ease if precipitation reaches much of the United States."</p><p><b>Feed crop devastated</p><p></b></p><p>Last year's drought destroyed about a third of the U.S. corn crop, the main ingredient in cattle feed, Lightsey said.</p><p>As a result, the percentage of the 2012-13 U.S. corn crop for animal feed, after subtracting for human consumption and ethanol production, shrank to 5.8 percent, the lowest in 40 years, said Chad Spearman, a CattleFax analyst.</p><p>That led to historic high prices, which are expected to hold for the first half of this year.</p><p>Meanwhile the drought dried up grazing land and sent hay stocks as of Dec. 1 to the lowest level in 55 years, Spearman said. That also led to record high prices, but CattleFax projected hay stocks would recover if rain returns to the Midwest and Southwestern states as anticipated.</p><p>The past several years of drought and high feed prices have forced cattle ranchers in other states to downsize their herds by selling more animals for slaughter.</p><p>The U.S. cattle population has declined by more than 7 million head during the past six years to less than 90 million head for the first time since the early 1950s, Spearman said.</p><p>With fewer cattle to support existing capacity at feedlots and packing plants, those segments have been losing money despite record high retail beef prices, Randy Blach, CattleFax CEO, told the conventioneers.</p><p>"Record high prices are no guarantee of profits," Blach said. "We have record high prices, but we also have record high break even points."</p><p>Despite losses farther up the chain, Florida cow-calf ranches benefit because the grazing operators, feedlots and packing companies farther up the chain need a certain number of cattle to stay in business, Blach and Lightsey said.</p><p>When cattle are not available from herds in other states, the demand for Florida calves increases.</p><p>The good times for Florida ranchers will continue until weather and market conditions allow their counterparts to rebuild their herds, Lightsey and Putnam agreed.</p><p>Even if that began today, it would take several years to rebuild to pre-drought herd sizes.</p>